Cryptocurrency experienced a boom in 2017 when Bitcoin value went through the roof, bringing with it the value of other cryptocurrencies as well. This value decreased over time, but crypto mining and trading still bring in a lot of money to a lot of people even today.
Although both methods bring some risks with them, which one is better, and which should you choose if you decide to spend your money in cryptocurrency for some profitable return?
Crypto mining revolves around using hardware to mine out blocks of cryptocurrency. This hardware mostly consists of CPU and multiple GPUs, and since crypto mining became popular, the prices of these components drastically increased.
If you decide on mining, you will need to invest in a rig, which can be a considerable investment, depending on your mining operation size. Alternatively, you can use one of the hosted mining services that are available. The returns on mining a single block of cryptocurrency can be very high but with the costs of investing in hardware, the money needed to support the operation, and the high transaction fees, coupled with the fluctuations in cryptocurrency value can significantly lower the gains.
On the other hand, even if your initial mining operation fails, you always have the hardware needed to start it again, and next time it will cost you even less. The only way that your mining operation completely fails is a hardware malfunction.
Crypto trading works on the same principle as, let’s say, stock exchange. You basically buy cryptocurrency, wait for its value to increase, and sell it, gaining profits.
While this method is riskier than mining, crypto trading doesn’t require you to sink in that much money in order to start doing it. You can start your trading with only $50 and then invest the gained money into more cryptocurrency later, further expanding your trading business and increasing the gains over time.
Using this method, you are basically doing research on different currencies and predicting which of them will see a rise in value so you can buy more of it later. This might be a lower risk, lower reward system, but again, you are investing less money. Even if you lose it all, you are still set back way less than when you start your mining operation.
There is really no way to decide which of these methods is better. It only depends on your starting funds, and how much you are willing to risk in order to possibly gain money. In my honest opinion, if you do decide to invest your money in cryptocurrencies, mixing these two methods and using them side by side is your best bet since you can use the funds on the one that works to support the failing one.